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The latest issue of The Corporate Executive has been sent to the printer. It is also available now online to members of TheCorporateCounsel.net who subscribe to the electronic format. This issue tackles two timely topics, dealing with “grounded” moonshot awards and addressing the many issues arising with the use of corporate aircraft by adopting a comprehensive policy. On the topic of “grounded” moonshot awards, the issue notes:

We delve into the dynamics of moonshot awards again, and address the steps required when dealing with a grounded moonshot award. The first step is acceptance on the part of all parties involved that the goals and strategic vision associated with the moonshot award are not going to be achieved, and an understanding that the outstanding award is likely doing more harm than good. The second step is carefully considering the options, which could include modification or replacement, cancellation, forfeiture or maintaining the status quo. The third step is getting the governance right with respect to dealing with the grounded moonshot award. The fourth step is being transparent about moonshot awards and any subsequent changes to such awards, because it is important for a wide range of stakeholders to understand the rationale. Finally, it is important to consider the potential litigation risk when granting or subsequently changing moonshot awards.

On the topic of executive use of corporate aircraft, the May-June 2024 issue of The Corporate Executive notes that, with all of the focus on aircraft use right now by the SEC, the media and the general public, now is a good time to consider adopting a policy specifically addressing the use of corporate owned or leased aircraft. In the issue, we provide a form of policy that companies can adapt to their own circumstances. A key consideration when formulating an aircraft policy is the extent to which use of corporate aircraft is a very public endeavor, as noted in this excerpt:

When formulating a policy governing the use of corporate aircraft, companies should carefully consider that there is radical transparency around the flights that private aircraft take. As evidenced by reports of individuals tracking the private aircraft use of Taylor Swift and Elon Musk, and periodic coverage in business publications of where company aircraft is flying to and from, tracking the use of private aircraft is relatively easy based on publicly available information. Each aircraft is assigned a tail number that can be used to track the movement of the aircraft on websites such as FlightAware.com. Aircraft registration is generally considered to be public information in the U.S., which makes it relatively easy to find and track U.S.-registered aircraft by their unique tail number. It is possible for owners of aircraft to avoid this transparency by registering the aircraft in certain jurisdictions outside of the U.S. (e.g., Aruba, Bermuda, Cayman Islands, Isle of Man) or by disabling aircraft tracking for privacy purposes. European data privacy rules also prohibit the tracking of certain aircraft for privacy purposes.

Transparency around flight information can raise a number of considerations for companies using private aircraft travel for both business and personal purposes. For example, there are security considerations whenever an executive is traveling for either business or personal purposes, so the ability of the public to track a corporation’s aircraft can heighten security concerns when individuals or groups are able to determine that the executive is flying to a particular location. Further, it is conceivable that persons might use flight tracking information to try to gather business intelligence or information to inform trading decisions by identifying locations where the company aircraft is frequently flying to or from during specific periods in time. In the context of private use of corporate aircraft, back in 2011 the Wall Street Journal used tail numbers and information derived from Freedom of Information Act (“FOIA”) requests to create a database that tracked the use of corporate aircraft by particular companies, analyze patterns to identify where the planes were flying to and whether those locations had connections to the CEO or other executive officers (e.g., locations of homes, vacation destinations), and identify the potential costs associated with that travel based on industry estimates.

In formulating a policy concerning personal use of aircraft, the company should consider how such personal use will be perceived by investors and the public more broadly when identified in SEC filings and in potential news stories focused on executive perquisites, given the significant transparency surrounding the use of corporate aircraft and the fact that it is a frequent area of focus for the business media.

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– Dave Lynn